908 F.2d 555 (9th Cir. 1990), 88-6455, Effects Associates, Inc. v. Cohen

Docket Nº:88-6455.
Citation:908 F.2d 555
Party Name:15 U.S.P.Q.2d 1559 EFFECTS ASSOCIATES, INC., Plaintiff-counter-defendant-Appellant, v. Larry COHEN; Larco Productions, Inc.; New World Entertainment, Defendants-counter-claimants-Appellees.
Case Date:July 20, 1990
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 555

908 F.2d 555 (9th Cir. 1990)

15 U.S.P.Q.2d 1559

EFFECTS ASSOCIATES, INC., Plaintiff-counter-defendant-Appellant,

v.

Larry COHEN; Larco Productions, Inc.; New World

Entertainment, Defendants-counter-claimants-Appellees.

No. 88-6455.

United States Court of Appeals, Ninth Circuit

July 20, 1990

Argued and Submitted March 7, 1990.

John Blair Overton, Sausalito, Cal., for plaintiff-counter-defendant-appellant.

Vincent Cox, Leopold, Petrich & Smith, Los Angeles, Cal., for defendants-counter-claimants-appellees.

Appeal from the United States District Court for the Central District of California.

Before CANBY, KOZINSKI and LEAVY, Circuit Judges.

KOZINSKI, Circuit Judge:

What we have here is a failure to compensate. Larry Cohen, a low-budget horror movie mogul, paid less than the agreed price for special effects footage he had commissioned from Effects Associates. Cohen then used this footage without first obtaining a written license or assignment of the copyright; Effects sued for copyright infringement. We consider whether a transfer of copyright without a written agreement, an arrangement apparently not uncommon in the motion picture industry, conforms with the requirements of the Copyright Act.

Facts

This started out as a run-of-the-mill Hollywood squabble. Defendant Larry Cohen wrote, directed and executive produced "The Stuff," a horror movie with a dash of social satire: Earth is invaded by an alien

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life form that looks (and tastes) like frozen yogurt but, alas, has some unfortunate side effects--it's addictive and takes over the mind of anyone who eats it. Marketed by an unscrupulous entrepreneur, the Stuff becomes a big hit. An industrial spy hired by ice cream manufacturers eventually uncovers the terrible truth; he alerts the American people and blows up the yogurt factory, making the world safe once again for lovers of frozen confections.

In cooking up this gustatory melodrama, Cohen asked Effects Associates, a small special effects company, to create footage to enhance certain action sequences in the film. In a short letter dated October 29, 1984, Effects offered to prepare seven shots, 1 the most dramatic of which would depict the climactic explosion of the Stuff factory. Cohen agreed to the deal orally, but no one said anything about who would own the copyright in the footage.

Cohen was unhappy with the factory explosion Effects created, and he expressed his dissatisfaction by paying Effects only half the promised amount for that shot. Effects made several demands for the rest of the money (a little over $8,000), but Cohen refused. Nevertheless, Cohen incorporated Effects's footage into the film and turned it over to New World Entertainment for distribution. Effects then brought this copyright infringement action, claiming that Cohen (along with his production company and New World) had no right to use the special effects footage unless he paid Effects the full contract price. Effects also brought pendent state law claims for fraud and conspiracy to infringe copyright.

The district court initially dismissed the suit, holding that it was primarily a contract dispute and, as such, did not arise under federal law. In an opinion remarkable for its lucidity, we reversed and remanded, concluding that plaintiff was "master of his claim" and could opt to pursue the copyright infringement action instead of suing on the contract. Effects Assocs., Inc. v. Cohen, 817 F.2d 72, 73 (9th Cir.1987). We recognized that the issue on remand would be whether Effects had transferred to Cohen the right to use the footage. Id. at 73 & n. 1, 74.

On remand, the district court granted summary judgment to Cohen on the infringement claim, holding that Effects had granted Cohen an implied license to use the shots. Accordingly, the court dismissed the remaining state law claims, allowing Effects to pursue them in state court. We review the district court's grant of summary judgment de novo.

Discussion

  1. Transfer of Copyright Ownership

    The law couldn't be clearer: The copyright owner of "a motion picture or other audiovisual work" has the exclusive rights to copy, distribute or display the copyrighted work publicly. 17 U.S.C. Sec. 106 (1988). While the copyright owner can sell or license his rights to someone else, section 204 of the Copyright Act invalidates a purported transfer of ownership unless it is in writing. 17 U.S.C. Sec. 204(a) (1988). 2 Here, no one disputes that Effects is the copyright owner of the special effects footage used in "The Stuff," 3 and that defendants...

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